Correlation Between Foreign Bond and Pimco Foreign
Can any of the company-specific risk be diversified away by investing in both Foreign Bond and Pimco Foreign at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Foreign Bond and Pimco Foreign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foreign Bond Fund and Pimco Foreign Bond, you can compare the effects of market volatilities on Foreign Bond and Pimco Foreign and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Foreign Bond with a short position of Pimco Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Pimco Foreign.
Diversification Opportunities for Foreign Bond and Pimco Foreign
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Foreign and Pimco is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund and Pimco Foreign Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Foreign Bond and Foreign Bond is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Foreign Bond Fund are associated (or correlated) with Pimco Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Foreign Bond has no effect on the direction of Foreign Bond i.e., Foreign Bond and Pimco Foreign go up and down completely randomly.
Pair Corralation between Foreign Bond and Pimco Foreign
Assuming the 90 days horizon Foreign Bond Fund is expected to generate 1.07 times more return on investment than Pimco Foreign. However, Foreign Bond is 1.07 times more volatile than Pimco Foreign Bond. It trades about -0.14 of its potential returns per unit of risk. Pimco Foreign Bond is currently generating about -0.22 per unit of risk. If you would invest 757.00 in Foreign Bond Fund on August 28, 2024 and sell it today you would lose (10.00) from holding Foreign Bond Fund or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Bond Fund vs. Pimco Foreign Bond
Performance |
| Timeline |
| Foreign Bond |
| Pimco Foreign Bond |
Foreign Bond and Pimco Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Pimco Foreign
The main advantage of trading using opposite Foreign Bond and Pimco Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond position performs unexpectedly, Pimco Foreign can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pimco Foreign will offset losses from the drop in Pimco Foreign's long position.| Foreign Bond vs. Usaa Mutual Funds | Foreign Bond vs. Franklin Government Money | Foreign Bond vs. T Rowe Price | Foreign Bond vs. Legg Mason Partners |
| Pimco Foreign vs. Pimco Rae Worldwide | Pimco Foreign vs. Pimco Realestaterealreturn Strategy | Pimco Foreign vs. Pimco Rae Worldwide | Pimco Foreign vs. Pimco Rae Worldwide |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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